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Investment Opportunity

The fund offers exposure to U.S. equities with an investment objective of capital appreciation and current income. The fund seeks to achieve its investment objective of capital appreciation by investing in ETFs, and/or securities representing the S&P 500 and the primary sectors of the S&P 500® Index, and market segments that include low volatility and high beta securities. Allocations are based on a proprietary rules-based momentum model that looks to overweight sectors and market segments that experienced stronger recent relative performance. Current income is achieved through an options strategy, utilizing index-based, out-of-the-money put and call credit spreads. The strategy is driven by implied volatility, as measured by the CBOE Volatility Index (VIX), and seeks to exploit pricing inefficiencies in the S&P 500® Index.

Effective December 8, 2014 this fund changed its strategy and its subadviser to Rampart Investment Management. Prior to October 11, 2016, the fund's name was the Virtus Growth & Income Fund.

Fund Risks

Equity Securities: The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small or medium-sized companies may enhance that risk.

Call/Put Spreads: Buying and selling call and put option spreads on the SPX Index risks the loss of the premium when buying, can limit upside participation and increase downside losses.

Portfolio Turnover: The fund's principal investments strategies will result in a consistently high portfolio turnover rate. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account.

Fund of Funds: Because the fund can invest in other funds, it indirectly bears its proportionate share of the operating expenses and management fees of the underlying fund(s).

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Prospectus: For additional information on risks, please see the fund's prospectus.

Key Stats (as of 2/24/2017)

Inception: 9/25/1997
Ticker: PDIAX
CUSIP: 92828N874
Fund No: 835
Net Assets by Fund: $173,150,468
Net Assets by Class: $115,004,427

Management Team

Warun Kumar
Warun Kumar Rampart Investment Management Company, LLC

Industry start date: 1993

Start date with Fund: 2016

Michael Davis
Michael Davis Rampart Investment Management Company, LLC

Industry start date: 1999

Start date with Fund: 2016

Brendan R. Finneran, CMT
Brendan R. Finneran, CMT Rampart Investment Management Company, LLC

Industry start date: 2003

Start date with Fund: 2014

Robert F. Hofeman, Jr.
Robert F. Hofeman, Jr. Rampart Investment Management Company, LLC

Industry start date: 2002

Start date with Fund: 2014

Rampart Investment Management Company, LLC

Rampart Investment Management strives to generate incremental yield and dampen portfolio volatility through the use of systematic and disciplined options solutions.

Morningstar Ratings

Overall Rating

As of 1/31/2017 the Fund was rated 5 stars out of 1256 funds, 3 stars out of 1108 funds and 3 stars out of 822 funds within the Large Blend category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Average Annual Total Returns

Monthly Performance (%) (as of 1/31/2017)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 11.09 1.81 20.82 10.92 12.49 6.12 6.49
POP 4.71 -4.04 13.87 8.76 11.16 5.49 6.16
Quarterly Performance (%) (as of 12/30/2016)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 7.58 11.90 11.90 9.21 13.90 6.08 6.42
POP 1.39 5.47 5.47 7.08 12.56 5.46 6.09
Index 3.82 11.96 11.96 8.87 14.66 6.95 NA

Index: S&P 500® Index
The S&P 500® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

Sales Charge and Expense

POP (Public Offering Price) performance reflects the deduction of the maximum sales charge of 5.75%. A contingent deferred sales charge of 1% may be imposed on certain redemptions within 18 months on purchases on which a finder’s fee has been paid.

The fund class gross expense ratio is 1.54%. The net expense ratio is 1.41%, which reflects a contractual expense reimbursement in effect through 07/31/2017. This ratio reflects the direct and indirect expenses paid by the Fund.

The net expense ratio minus the indirect expenses incurred by the underlying funds in which the Fund invests is 1.25%.

Risk Statistics3 (as of 12/30/2016)

  Fund Index
R2 0.87 1.00
Beta 0.95 1.00
Alpha 0.79 0.00
Std Dev 10.80 10.59
Index: S&P 500® Index

Daily Price (as of 2/24/2017)

NAV Change ($)
20.20 -0.01
POP Change ($)
21.43 -0.01

Top Holdings (% Fund)
(as of 12/30/2016)

Vanguard S&P 500 Index Fund 23.58
SPDR S&P 500 ETF Trust 15.72
Financial Select Sector SPDR Fund 8.77
Energy Select Sector SPDR Fund 7.90
Materials Select Sector SPDR Fund 7.77
Industrial Select Sector SPDR Fund 7.56
Chesapeake Energy Corporation 0.47
Williams Companies, Inc. 0.46
Freeport-McMoRan, Inc. 0.43
Transocean Ltd. 0.40

Top Sectors (% Equity)
(as of 12/30/2016)

Financials 23.87
Energy 18.87
Industrials 12.77
Information Technology 11.56
Materials 10.46

(as of 12/30/2016)

Avg Weighted Market Cap (bn) $99.09
Median Market Cap (bn) $18.82
Trailing P/E 16.64x
Price-to-Book Value 3.35
3-Year EPS Growth Rate 3.75

Morningstar Ratings

Overall Rating

As of 1/31/2017 the Fund was rated 5 stars out of 1256 funds, 3 stars out of 1108 funds and 3 stars out of 822 funds within the Large Blend category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Investors should carefully consider the investment objectives, risks, charges and expenses of any Virtus Mutual Fund before investing. The prospectus and summary prospectus contains this and other information about the fund. Please contact your financial representative, call 1-800- 243-4361 or visit www.virtus.com to obtain a current prospectus and/or summary prospectus. You should read the prospectus and/or summary prospectus carefully before you invest or send money.

Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, so your shares, when redeemed, may be worth more or less than their original cost.

Average annual total return is the annual compound return for the indicated period. It reflects the change in share price and the reinvestment of all dividends and capital gains. NAV returns do not include the effect of any applicable sales charges. POP and w/CDSC returns include the effect of maximum applicable sales charges.

Returns for periods of less than one year are cumulative total returns.

1 Yields/Distributions: Distribution Yield (at NAV) is calculated by (a) annualizing the latest distribution for fixed income funds or funds less than 1 year old (b) summing all distributions over the preceding 12 months for all other funds, and dividing the NAV on the last business date of the period. SEC Yield represents the net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the fund's public offering share price at the end of the 30-day period.  Gross SEC Yield represents the yield if there were no expense reimbursements.

2 Distribution History: Distributions are represented on a cash basis and may be reclassified at year end for tax purposes. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. STCG: Short Term Capital Gain, LTCG: Long Term Capital Gain

3 Risk Statistics:  R2 is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. Beta is a quantitative measure of the volatility of a given portfolio to the overall market. Alpha is a risk adjusted measure of an investment's excess return relative to a benchmark. A positive Alpha indicates that the investment produced a return greater than expected for the risk (as measured by Beta) taken. Standard Deviation measures variability of returns around the average return for an investment fund. Higher standard deviation suggests greater risk. Risk Statistics are calculated using 36 monthly returns.

4 Characteristics: For Equity Funds:Trailing P/E: Per-share stock price divided by the latest12-months Earnings per Share; Price/Cash Flow: Per-share stock price divided by the per-share operating cash flow; Price/Book: Per-share stock price divided by the latest 12-month per-share Book Value; 3-Year EPS Growth Rate: Average of earnings per share growth for latest 3-year period. The 3-Year EPS Growth Rate is not a forecast of the fund's performance.

4 Characteristics: For Fixed Income Funds:  Duration represents the interest rate sensitivity of a fixed income fund. For example, if a fund's duration is five years, a 1% increase in interest rates would result in a 5% decline in the fund's price. Similarly, a 1% decline in interest rates would result in a 5% gain in the fund's price.

Morningstar Disclosures:
The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

© 2016 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.